Natural gas is a fossil fuel that significantly contributes to the causes of the climate crisis. It is primarily composed of methane, a gas that’s up to 105 times more powerful than carbon dioxide at trapping heat in the atmosphere. Methane leaks occur at every stage of natural gas production— from drilling into the ground, escaping through open pipe valves, or being processed by inefficient machinery.

These leaks are significant sources of greenhouse gases entering the atmosphere, and therefore fueling global climate change. Yet still over half of American homes use it for space and water heating, ovens, lighting, and other purposes.  

Last month, Berkeley (CA) city councilors made history by banning the use of natural gas in new buildings. Any new multi-family residential buildings in the city beginning construction after January 2020 must be outfitted with electrically-powered induction stoves, heat pumps, and other electric appliances instead of natural gas fixtures like pipes. This policy is a powerful supplement to California’s existing carbon pricing system, and will help Berkeley reach its climate goals with the urgency we need.  

Why the ban?

Switching from natural gas to electricity to power buildings means that buildings themselves will no longer emit greenhouse gases on-site. Combined with Berkeley’s electricity being 78% carbon-free, the natural gas ban brings the city closer to its climate goals and paves the way for a zero-emissions future. If Berkeley City Council hadn’t imposed an outright ban alongside its current climate policies, the switch to electric buildings would take much longer—and we don’t have time to wait.

The burning of natural gas within Berkeley’s residential buildings accounted for 15% of the city’s total greenhouse gas emissions in 2016, and the city’s  population has grown by 18% since 2000 with a high likelihood to continue rising. Therefore, demand is surging in the city for energy to power new developments and sustain the growing population.

California’s Existing Climate Policy Landscape

California has a mandate to reduce its greenhouse gas emissions to 1990 levels by the year 2020, under  the Global Warming Solutions Act of 2006 (AB 32). Additionally, the state aims to achieve 100% clean energy by 2045. For Berkeley to contribute to statewide emissions reduction goals while maintaining population and economic growth, natural gas needs to be phased out in favor of electrification through renewable power sources. 

To achieve its emissions reduction goals that are part of AB 32, California is currently the only U.S. state with an economy-wide cap-and-trade program. Under this cap-and-trade system, major polluters—like natural gas distributors—have to submit one permit, called an allowance, for every metric ton of greenhouse gases they emit. The government reduces the total amount of allowances available over time, forcing companies to reduce emissions in order to stay under the “cap.” 

This increases companies’ costs: to comply with the policy, they’ll have to either reduce emissions, or buy more carbon permits. To balance these higher costs, they need to raise the price of their product (natural gas). Renewable electricity becomes cheaper in comparison, and building developers will be incentivized to favor using electricity in buildings instead of natural gas. Already, some builders in California have switched to 100% electric homes, as it saves $2,000-5,000 by forgoing gas lines. 

If this carbon pricing system is already in place, what made the ban necessary? Shouldn’t the market have already figured it out? 

Ban vs. Price on Pollution

There are two main approaches to reducing greenhouse gases and moving the economy towards low-carbon energy sources: direct regulations (like the natural gas ban in Berkeley), and market-based mechanisms (like the cap-and-trade program). These two approaches can work well together, and can in fact be complementary policies.

Market mechanisms are designed to incentivize the economy to smoothly transition to clean energy through incremental financial and behavioral changes. Companies in California trying to reduce emissions will go for the cheapest, quickest changes first. So far, these changes have mostly occurred in the electricity sector. The economy-wide emissions cap becomes more restrictive, and more expensive greenhouse gas reduction strategies happen later on.

However, even if a builder has higher gas costs tracing back to cap-and-trade, the builder’s choice to go electric depends on their knowledge of how to do so, their immediate access to capital to cover up-front costs (like switching to induction ovens), and how financial benefits are distributed. For example, a landlord may have to pay for installation of electric appliances, while all further savings go to the renter in the form of reduced utility bills. Because of these specifications, not enough buildings are going electric under the cap-and-trade program alone. 

The natural gas ban raises the urgency with which housing developers need to address climate change, and reduce the environmental footprint of buildings in Berkeley. While Berkeley can’t directly control fossil fuel producers’ commerce, they can supplement the state’s cap-and-trade system with this ban, which guides homeowners and businesses in transitioning to clean energy and brings them large savings in the process.

What can other cities learn?

Berkeley is far from the only city that can benefit from a policy like this, whether or not that city is subject to a wider carbon pollution pricing system.  

23 major cities across the globe have signed onto the Net Zero Carbon Buildings Declaration, a pledge to incorporate zero-emission buildings into local infrastructure through retrofitting or new construction. Strategies include developing better insulation, utilizing energy-efficient heat pumps, and installing optimized lighting like LEDs in buildings. From smaller communities like Newburyport, MA, to global hubs like Paris, France, city governments are leading the charge to transition to a net zero emissions future while continuing to grow and develop. 

These net zero initiatives not only generate savings for citizens, but also help protect public health and safety. Natural gas is often transported through faulty pipes prone to leaking methane or becoming over-pressurized, which can cause deadly explosions like what we saw in Andover and El Paso last year. By switching buildings to clean electricity, we can not only reduce emissions at the rate we need, but also prevent unnecessary injuries and deaths caused by natural gas.

The Takeaway

Berkeley ramps up the momentum for a growing number of states and cities taking steps away from fossil fuels, and towards a clean, efficient future. Whether these steps include market mechanisms like California’s cap-and-trade program, or direct regulations like Berkeley’s natural gas ban, more and more subnational jurisdictions are harnessing their power to act on climate—and it’s working. Berkeley’s groundbreaking natural gas ban will hopefully be the first in a long list of other U.S. communities passing similar policies for the sake of our health, our planet, and our future.